Abstract
ABSTRACT This study extends the stream of literature of whether diversity has an effect on a firm’s financial performance. As the composition of the board of directors is becoming more heterogeneous, there is a need to understand how this diversity will affects the performance of the firm. In this study, we analyze whether two composition characteristics on the board of directors will influence firm performance and if there is a significant difference if they operate at the national or multinational level. Our results showed that boards with more females as well as being ethnically diverse has a positive association with firm performance. Additionally, it also showed that such effects are higher when they operate multi-nationally. This is a contribution to the literature as the results emphasize a need for a more diverse board of directors to align with current challenges including cultural differences, competition, and understanding customer preferences. Keywords Gender, ethnic diversity, board of directors, firm performance, multinational operations, software: WarpPLS 5.0
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